Three quarters of small firms now prefer short-term office leases

Brexit uncertainty is encouraging startups to opt for short-term leases

Almost three quarters of Britain’s small business owners now want short-term flexible office contracts of less than three months, new research has found.

The desire for short-term leases has risen dramatically since the first three months of the year, when just 57 per cent of owners sought flexible short-term leases on office premises.

The results of Citibase’s latest Business Confidence Index found that three-month office leases have become particularly popular in the North East of England, where 90 per cent of businesses preferred this short-term option.

Three-month leases were also found to be popular with Scottish businesses. The index revealed 81 per cent of small business owners in Scotland now favoured the flexibility of a short-term office lease.

Taking the temperature of more than 1,000 UK business leaders, the research findings suggested Brexit’s negative consequences had created an uncertain atmosphere amongst businesses.

This uncertain atmosphere was in turn encouraging owners to opt for flexible short-term office leases rather than commit to renting office premises in the longer term.

Some 23 per cent of respondent business owners said Brexit was already having a negative effect on revenue. That figure has grown by two per cent in every quarter in 2017 (17 per cent in Q1, 19 per cent in Q2 and 21 per cent in Q3).

The impact of Brexit was more evident in London than the rest of the country. Some 30 per cent of the capital’s owners reported a fall in revenue as a result of Brexit so far, while 42 per cent expected a negative impact on revenue when Brexit finally take place.

This proportion drops to 25 per cent in the South West of England, but climbs to 50 per cent in the North East of England.

Commenting on the findings, Citibase CEO, Steve Jude, agreed that Brexit uncertainty was effecting the office leasing habits of small firms. He said: “The heady combination of stalling Brexit talks, unrest within the Government and the suggestion that Britain may be prepared to walk away with no deal at all is causing unrest among SMEs.

“As a result, we are seeing a significant shift towards flexibility and agility, with nearly three quarters of entrepreneurs, startups and small businesses now shunning longer term, traditional office leases in favour of shorter terms.”

The survey also revealed the key office features that small business found most important when looking for new office space. The three most popular choices were high speed internet (71 per cent), flexible contracts (44 per cent) and the ability to easily change the size of your office (44 per cent).

Jude added: “This is hard evidence that more and more businesses are waking up to the opportunities of taking low-risk contracts in fully serviced flexible ‘officing’ hubs, allowing them to focus on what’s important – the success and growth of their businesses.”

ABOUT THE EXPERT

Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.